BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF COLORADO

IN THE MATTER OF THE
PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN
THE WATTENBERG FIELD,

WELD COUNTY, COLORADO

)

)

)

)

CAUSE NOS. 232 & 407

ORDER NOS. 232-303 & 407-516

REPORT OF THE COMMISSION

The Commission heard this matter on
December 12, 2011, at the
Weld County Administration Building, 1150 O Street, Greeley, Colorado 80631
upon application for an order
to establish an approximate 160-acre wellbore spacing unit in Section 26,
Township 7 North, Range 65 West, 6th P.M., for the planned Andrews
#26-53 well, at a location authorized by Commission Rule 318A, for production of
oil, gas and related hydrocarbons from the J Sand, Codell, and/or Niobrara
Formations.

FINDINGS

The Commission finds as follows:

1. Great Western Oil and Gas
Company LLC (“Great Western”
or “Applicant”), as applicant
herein, is an interested party in the subject matter of the above‑referenced
hearing.

2. Due notice of the time, place
and purpose of the hearing has been given in all respects as required by law.

3. The Commission has
jurisdiction over the subject matter embraced in said Notice, and of the parties
interested therein, and jurisdiction to promulgate the hereinafter prescribed
order pursuant to the Oil and Gas Conservation Act.

4. On April 27, 1998, the
Commission adopted Rule 318A., which, among other things, allowed certain
drilling locations to be utilized to drill or twin a well, deepen a well or
recomplete a well and to commingle any or all of the Cretaceous Age Formations
from the base of the Dakota Formation to the surface. Pursuant to Rule 318A.j.,
Rule 318A. supersedes all prior Commission drilling and spacing orders affecting
well location and density requirements of Greater Wattenberg Area wells. Rule
318A.d. provides that an operator may allocate production to any drilling and
spacing unit with respect to a particular Cretaceous Age Formation consistent
with the provisions of Rule 318A. The below-described lands are subject to Rule
318A., for the production of oil, gas and associated hydrocarbons from the
Codell and Niobrara Formation:

Township 7 North, Range 65 West, 6th
P.M.

Section 26: SW¼

5. On October 12, 2011, Great
Western, by its attorneys, filed with the Commission a verified application
(“Application”) for an order to establish an approximate 160-acre wellbore
spacing unit in the below-listed lands (“Application Lands”), for the planned
Andrews #26-53 well, at a location authorized by Commission Rule 318A, for the
production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or
Niobrara Formations, without exception being granted by the Director:

Township 7 North, Range 65 West, 6th
P.M.

Section 26: SW¼

6. On November 28, 2011, Great Western,
by its attorneys, filed with the Commission a written request to approve the
Application based on the merits of the verified Application and the supporting
exhibits. Sworn written was
submitted in support of the Application.

7. Land
Testimony submitted in support of the Application by Royce H. Allen, Land
Manager for Great Western, concluded Great Western owns an oil and gas leasehold
interest in the Application Lands. Testimony further concluded that no wells
have been drilled in the SW¼ of Section 26 to the Codell, Niobrara, and/or J
Sand Formations.

8. Great
Western requests the Commission take administrative notice that previous
testimony before the Commission has established that 80-acre drilling and
spacing units are not less than the maximum area that can be efficiently and
economically drained by wells producing oil, gas and associated hydrocarbons
from the Codell, Niobrara, and J Sand Formations in the Application Lands.

9. The above-referenced testimony
shows that granting the Application will allow more efficient reservoir
drainage, will prevent waste, will assure a greater ultimate recovery of
hydrocarbons, and will not violate correlative rights.

10. The Application was reviewed
by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant
to consultation provisions of Rule 306.d. In a letter dated December 1, 2011,
the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any
additional conditions of approval are necessary for approving the amended
Application.

11. Great Western
agreed to be bound by oral order of the Commission.

12. Based on the facts stated in
the verified Application, having received no protests, and based on the Hearing
Officer review of the Application under Rule 511., the Commission should enter
an order to establish an approximate 160-acre wellbore spacing unit in Section
26, Township 7 North, Range 65 West, 6th P.M., for the planned
Andrews #26-53 well, at a location authorized by Commission Rule 318A, for
production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or
Niobrara Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that
an approximate 160-acre wellbore spacing unit, is hereby established, in the
below-listed lands, for the planned Andrews #26-53 well, at a location
consistent with Commission Rule 318A, for production of oil, gas and related
hydrocarbons from the J Sand, Codell, and/or Niobrara Formations, without
exception being granted by the Director:

Township 7 North, Range 65 West, 6th
P.M.

Section 26: SW¼

IT IS FURTHER
ORDERED, that the
provisions contained in the above order shall become effective immediately.

IT IS
FURTHER ORDERED, that the Commission expressly reserves its right, after notice
and hearing, to alter, amend or repeal any and/or all of the above orders.

IT IS
FURTHER ORDERED, that under the State Administrative Procedure Act the
Commission considers this Order to be final agency action for purposes of
judicial review within 30 days after the date this Order is mailed by the
Commission.

IT IS
FURTHER ORDERED, that an application for reconsideration by the Commission of
this Order is not required prior to the filing for judicial review.